When filling out an investment portfolio, investors can turn to exchange traded funds to gain broad, diversified exposure to various assets in the U.S. and around the world.
ETFs have become an increasingly popular way to access markets due to their easy accessibility, cheap costs and passive exposure to widely observed benchmark indices.
“It’s happening because the markets have become more efficient,” Gabriel Pincus, president of GA Pincus Funds, told U.S. News. “It’s very hard to outperform an index these days. Years ago when spreads were wider and information moved more slowly, it was easier and people could outperform the index. Now that everyone has the same information, it’s very difficult.”
Anthony D. Criscuolo, a certified financial planner and portfolio manager with Palisades Hudson Financial Group in Fort, pointed out that ETFs provide more tax efficiency than most traditional open-end mutual funds. Moreover, some mutual funds have high investment minimums, whereas investors can buy and sell 1 ETF share at a time if they so choose.